Procurement report highlights misconduct risks

Victoria’s anti-corruption commission has called for Local Government Victoria to consider a code of conduct requiring local government suppliers to report misconduct after it found a risk of corruption in procurement processes.

The report by the Independent Broad-based Anti-corruption Commission (IBAC) concluded that ‘In local government, where a range of employees are responsible for procuring a diverse and complex range of goods, services and works dealing with everything from waste management and road construction to stationery and information technology, procurement processes can be subject to significant corruption risks.’

The report focused on investigations at two Victorian councils, Darebin City Council and City of Ballarat.

Both investigations related to allegations that council employees used procurement processes for the benefit of themselves and associates.

In operation Dorset, launched in 2015, IBAC found a project manager at Darebin helped an associate’s company, which gave him gifts and benefits, win more than $16 million in contracts.

The gifts included cash payments, alcohol, grand prix tickets and a $1500 GPS.

The second investigation, Operation Royston, launched in 2016, found former City of Ballarat Council manager Lukas Carey, who in 2017 was sentenced to three years jail and ordered to repay council $31,000, had helped associates and family win contracts in exchange for financial kickbacks.

IBAC found that over two years Mr Carey unlawfully authorised payments worth more than $184,000 and obtained $103,630 in benefits.

“Allegations of corruption associated with council procurement practices and processes are a recurring theme in the complaints received and investigated by IBAC,” Commissioner Robert Redlich QC said.

“This report highlights a range of procurement-related corruption risks and vulnerabilities which, while they were found in two councils, are likely to be faced by most if not all councils in Victoria.”

The report concluded that ‘Victorian councils play a pivotal role in providing and maintaining a wide range of services, programs and infrastructure for their communities. With responsibility for the management of community infrastructure worth approximately $90 billion and delivery of more than $7 billion in critical public services every year, councils spend between 45 per cent and 60 per cent of their annual budgets on procurement. Considerable power is therefore vested in public officers of councils to source suppliers, manage contracts and authorise payment for goods, services and works – using public money.’

The full report is available here.

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